Synopsys Q1 Earnings Surpass Estimates, Revenues Rise Y/Y

Synopsys SNPS reported non-GAAP earnings of $3.77 per share for the first quarter of fiscal 2026, which beat the Zacks Consensus Estimate by 5.6%. The bottom line increased 24.4% on a year-over-year basis.

Synopsys’ earnings beat the Zacks Consensus Estimate thrice and missed once in the trailing four quarters, with the average surprise being 1.5%.

Synopsys’ fiscal first-quarter revenues jumped 65.5% year over year to $2.41 billion, beating the Zacks Consensus Estimate by 0.8%. The top line was primarily driven by an increase in revenues of Time-Based Product, Upfront Product and Maintenance and Service businesses.

Synopsys’ Q1 Details

In the license-type revenue group, Time-Based Product revenues of $951.5 million (representing 39.5% of total revenues) increased 14.9% year over year. Upfront Product revenues (30.8% of total) rose 101.4% to $741.5 million. Maintenance and Service revenues (29.7% of total) surged to $715.7 million, up sharply from the year-ago quarter’s $258.9 million.

Synopsys, Inc. Price, Consensus and EPS Surprise

Synopsys, Inc. price-consensus-eps-surprise-chart | Synopsys, Inc. Quote

Segment-wise, Design Automation revenues, which include EDA, Ansys and Other, were $2 billion, representing 83.1% of total revenues and up 96.2% from the prior-year quarter. Design IP revenues were $407 million, representing 16.9% of total revenues and down from $435.1 million a year ago. With the addition of Ansys, the Simulation & Analysis group is now incorporated into the EDA segment, beginning the third quarter of fiscal 2025. Other revenues were $17.4 million, representing 0.7% of total revenues. Ansys contributed 36.8% of the total revenues.

Geographically, Synopsys generated $1.12 billion from North America (47% of total) and $467 million from Europe (19%). Revenues from Korea (10%), China (9%) and Other regions (15%) were $246.6 million, $211.1 million and $360.4 million, respectively.

The non-GAAP operating margin for the quarter was 42.1%, which expanded 560 basis points from the year-ago period.

Within segments, Design Automation’s adjusted operating margin improved to 47.3%, up from 39.7% a year earlier, while the Design IP segment’s adjusted margin contracted to 16.2%, down from 29.1% last year.

Synopsys’ Balance Sheet & Cash Flow

Synopsys ended the first quarter of fiscal 2026 with $2.20 billion in cash, cash equivalents and short-term investments, down from $2.96 billion in the prior quarter. Total long-term debt was $10.02 billion.

During the first quarter of fiscal 2026, Synopsys generated $856.83 million in operating cash flow.

SNPS’ Guidance for FY26

For fiscal 2026, Synopsys expects revenues in the range of $9.56-$9.66 billion, including $2.9 billion of expected Ansys revenues. The Zacks Consensus Estimate for SNPS’ fiscal 2026 revenues is pegged at $9.63 billion, indicating year-over-year growth of 36.5%.

Non-GAAP EPS is expected between $14.38 and $14.46, up from the prior range of $14.32-$14.40. Non-GAAP expenses are projected to be in the range of $5.69-$5.75 billion. The Zacks Consensus Estimate for SNPS’ fiscal 2026 earnings is pegged at $14.39, indicating year-over-year growth of 11.5%.

For the second quarter of fiscal 2026, Synopsys expects revenues between $2.225 billion and $2.275 billion. The Zacks Consensus Estimate for SNPS’ second-quarter fiscal 2026 revenues is pegged at $2.25 billion, indicating year-over-year growth of 40.3%.

Management expects non-GAAP EPS between $3.11 and $3.17. The Zacks Consensus Estimate for SNPS’ second-quarter fiscal 2026 earnings is pegged at $3.13, indicating a year-over-year decline of 14.7%.

SNPS’ Zacks Rank and Stocks to Consider

Currently, SNPS carries a Zacks Rank #4 (Sell).

Lam Research LRCX, Applied Materials AMAT and Amphenol APH are some better-ranked stocks that investors can consider in the Zacks Computer and Technology sector. Lam Research, Applied Materials and Amphenol carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Lam Research’s fiscal 2026 earnings is pegged at $5.26 per share, revised upward by 8.5% over the past 30 days and suggests a year-over-year increase of 27.1%. Lam Research shares have soared 229.1% over the past year.

The Zacks Consensus Estimate for Applied Materials’ fiscal 2026 earnings has moved upward by 8 cents over the past seven days to $10.96 per share, calling for an increase of 16.4% year over year. Applied Materials shares have climbed 153.5% in trailing 12 months.

The Zacks Consensus Estimate for Amphenol’s 2026 earnings has been revised upward to $4.32 per share from $4.30 over the past 30 days. Amphenol shares have surged 137.4% over the past year.

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